How to try to negotiate a rent increase

GOT a letter in the mail saying your rent is going up? The law may not be on your side, but playing savvy just might.

Try talking: It’s worth opening a conversation to challenge a rent increase — even if you end up having to walk. Picture: iStock

A REVIEW of NSW rent laws has failed to address making landlords justify rent rises above the consumer price index, leaving tenants facing more of the same when it comes to spiralling rents.

Tenant advocates such as the Tenants Union of NSW (TUNSW) had pushed for reform as part of a statutory review of the NSW Residential Tenancies Act, but the report from that review has been submitted to parliament with no legislative changes recommended to government.

The status quo leaves renters still hard-pressed to negotiate increases in a rental market which continues to bite across Australia, TUNSW policy officer Ned Cutcher says.

So tenants need to be savvy not only about their rights, but also do their research when they are given notice their rent is being reviewed.

In the end, however, tenants who simply can’t afford a rent increase will probably have to walk, he warned.

“Under the existing NSW law, if you want to challenge a rent increase, and can’t negotiate that directly with the landlord, the only option is to go the NSW Civil and Administrative Tribunal (NCAT) seeking an order that the new rent is excessive — and the onus is on the tenant to prove it,” Mr Cutcher said.

“We had been hoping for the laws to be amended to give tenants a little more power — and put the onus on landlords to prove why an increase beyond CPI (the Consumer Price Index reflecting the general inflation rate) is reasonable.”

“That hasn’t happened, so tenants need to continue to do what they can when faced with rent increases.

“And you have to remember that if you end up at the tribunal challenging an increase, the onus is on the tenant — and the tribunal cannot rule an increase is unreasonable, only if it is excessive.

“And that can be quite a difference — in the end being unable to afford a rent increase isn’t grounds for the tribunal to rule that an increase is excessive. Inability to pay is expressly ruled out.”

With the vacancy rates in Sydney along running at 1.6 per cent, it remains a landlord’s market. Here’s some these tips on trying to negotiate the best outcome if you are hit with a rent increase:

TRY TO START A CONVERSATION

Tenants must given 60 days notice of an increase. You have three options. Wear the increase, negotiate with the landlord or agent to lower or withdraw the increase, and/or apply to NCAT for an order the rent is excessive, You have 30 days to do that.

“The first thing to do is try to negotiate with the landlord,” Mr Cutcher said.

“Ask if the increase is up for discussion, and if you can offer an increase of slightly less.”

CHECK THE MARKET AROUND YOU

“Have a look around at conditions in your neighbourhood and suburb — what the rental market is doing,” said Mr Cutcher.

See what prices are for similar rental properties in your area — a starting point might be TUNSW’s recent launch of a publication called the Rent Tracker “which shows the discrepancy between asking prices and actual rents”.

Reality is, when you weigh it up, moving on might be the only option.Picture: iStock

DO YOUR SUMS AND TAKE STOCK

Can you afford a smaller increase? Is there an argument to be mounted for a smaller increase?

Would the landlord have to do work on the place if it’s left vacant for a few weeks if you elect to move out — get an estimate on what it would cost, and what the downtime would be — they might strengthen your case for a smaller increase.

It’s also a good time to perhaps recap why you are a valuable tenant.

Approach these discussions in a conciliatory way, offering solutions or concessions.

“Showing you have you’ve done your sums and research is what most people do,” Mr Cutcher said.

“You might be taking a bit of a punt — you have to really ask how badly does the landlord need me to be here? How long will it take them to rent this place? What work really needs doing? But you have to weigh that against your own options and opportunities — what will it cost me to move if I am going to call the landlord’s bluff?”

REALITY BITES

Fact is, landlords and agents are under no obligation to negotiate a rent increase, but compromise is possible.

“If they’re not receptive to having a conversation and you want to pursue your case, the next step is a tribunal application, where you present your arguments in a more formal form,” Mr Cutcher said.

“At the end of the day if you can’t reach some sort of agreement and you are not prepared to pay the increase, the tribunal is your next option.

“Just remember the tenant’s ability to pay is expressly ruled out as a factor that the tribunal can consider.”

Mr Cutcher says the odds are stacked against tenants when it comes to rent rises.

“The reality is sometimes the only solution for the tenant is to move somewhere more affordable.

“Unfortunately that usually means moving somewhere away from there area they have been established in because rents tend to go up around you.

“And an increase is usually an attempt to bring the property into line with what the market is doing.

“The latest figures I have seen have put rents around Sydney at about 1.6 per cent. I think 3 per cent has always been the benchmark of perfect equilibrium where it is neither tenants or landlord’s market — so 1.6 per cent clearly indicates things are pretty tight.

“It’s tough, it’s brutal and some people are hanging in by the skin of their teeth.

“Rents rarely go down. They're largely going up faster than incomes, so the only option is to try having a conversation.”